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Thursday, December 26, 2013

Paul Krugman, "The Fear Economy": You Ain't Seen Nothing Yet!

Citing the country music classic "Take This Job and Shove It" in his latest New York Times op-ed entitled "The Fear Economy" (http://www.nytimes.com/2013/12/27/opinion/krugman-the-fear-economy.html?ref=opinion&_r=0), Paul Krugman observes that owing to a weak job market, many employees are not able to leave positions that they despise. Krugman writes:

"The economic recovery has, as I said, been weak and inadequate, but all the burden of that weakness is being borne by workers. Corporate profits plunged during the financial crisis, but quickly bounced back, and they continued to soar. Indeed, at this point, after-tax profits are more than 60 percent higher than they were in 2007, before the recession began. We don’t know how much of this profit surge can be explained by the fear factor — the ability to squeeze workers who know that they have no place to go. But it must be at least part of the explanation. In fact, it’s possible (although by no means certain) that corporate interests are actually doing better in a somewhat depressed economy than they would if we had full employment."

Well, there is another rock and roll classic by Bachman Turner Overdrive titled "You Ain't Seen Nothing Yet," which perhaps more aptly describes today's employer/employee relationship in the US. Although there is debate on the ultimate effect of the Affordable Care Act on the job market, there is certainly evidence at many companies that full-time jobs are being eliminated and premium health care benefits are being reduced owing to the law's requirements (see: http://www.nationalreview.com/article/359861/100-unintended-consequences-obamacare-andrew-johnson).

Back in September 2009, President Obama declared with regard to the implementation of the Affordable Care Act (http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-to-a-Joint-Session-of-Congress-on-Health-Care/):

"This exchange will take effect in four years, which will give us time to do it right."

Regrettably, this has proven anything but the case.

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